Sun Electric Expected To Fight Award

July 04, 1985|By Matt O`Connor.

A U.S. District Court jury in northern California has imposed $10 million in civil damages against Sun Electric Corp., finding the northwest suburban Crystal Lake firm guilty of interfering with a competitor`s business and filing malicious suits.

In its decision, however, the jury found Sun Electric didn`t attempt to monopolize the market for wheel-balancing equipment.

A Sun Electric spokesman said the firm was preparing to file post-trial motions.

Awarded the damages were Donald B. Curchod, an engineer and inventor from Menlo Park, Calif., and two companies he founded--Autotron Equipment Corp., now defunct, and Dynabal Corp. of Palo Alto, Calif. Both companies competed against Nortron Corp., which Curchod sold to Sun Electric in 1978.

After Nortron Corp., a Sun Electric subsidiary, dropped its patent infringement suit last year against Curchod and the two companies, Curchod, Autotron and Dynabal sued Sun Electric for patent abuse, interference and malicious prosecution.

The federal court jury in San Jose reached its verdict in the civil suit late Monday after a six-week trial and four days of deliberations.

In a brief statement released late Tuesday, Sun Electric, manufacturer of automotive-test equipment, acknowledged the damages and called the verdict unjustified.

D. Barry Davis, Sun Electric`s chairman, was quoted as saying: ``We intend to take all necessary action to set aside the verdict.`` A company spokesman said lawyers were preparing to file post-trial motions.

The spokesman, Craig Loomis, refused to disclose if the $10 million in damages would hurt Sun Electric`s earnings, but he said, ``It`s a big number for us.`` The company has posted a profit exceeding $10 million only once before--net income of $11.3 million for fiscal 1980.

In each of the last four years, Sun Electric reported losses, totaling $15.9 million. Despite a second-quarter profit, the company had a net loss of $1 million in the first half of fiscal 1985, ended April 30, as sales fell 10 percent to $79 million from a year earlier.

According to John Clark, Curchod`s attorney, the case dates to 1978, when Curchod, then president of Nortron, and other principals sold the company, a maker of wheel-balancing equipment, to Sun Electric for more than $1 million in Sun Electric stock. Curchod remained as president.

In 1979, he asked to step down as president but remain with Nortron as an engineer, designing and developing products. Instead, Sun Electric fired him. Later in 1979, Curchod formed Autotron, with much of his own money, to make wheel balancers. In 1980, Nortron sued, alleging that Autotron infringed on its patent, developed by Curchod, and that Curchod stole trade secrets and hired former Nortron employees with additional trade secrets.

Clark said Autotron, unable to raise money because of the lawsuit, filed for Chapter 11 bankruptcy protection from creditors in the summer of 1981. By the next year, a would-be distributor for Autotron, CEE-GEE Manufacturing Co. of Nashua, N.H., backed out of an agreement with Autotron when Sun Electric sent a ``threatening`` letter advising CEE-GEE of its suit, Clark said. CEE-GEE`s withdrawal effectively ended Autotron`s chances of survival, he added.

Curchod then formed Dynabal, another manufacturer of wheel-balancing equipment.

Sun Electric responded with another suit in 1983. But in early 1984, with the suits set to go to trial, Sun Electric sought to dismiss its suits

``without prejudice,`` which would allow it to refile later. Dynabal and Autotron objected, and a federal judge dismissed Sun Electric`s suits ``with prejudice.``

Later last year, Curchod, Dynabal and Autotron filed their suit against Sun Electric.

The jury found Sun Electric interfered with the CEE-GEE contract and

``maliciously prosecuted`` Curchod and his two companies. But it ruled Sun Electric didn`t abuse its patent in violation of antitrust law--or in effect didn`t attempt a monopoly.

Ian Feinberg, a California attorney who helped represent Sun Electric, said the jury awarded Curchod $2.5 million for lost profits and emotional distress, Autotron $6 million and Dynabal $1.5 million.

Clark said Curchod`s troubles with Sun Electric had forced a change in lifestyle--``from pleasant to modest.``

Clark said he expects Sun Electric attorneys to file a motion for a new trial.

JUMP

After Nortron Corp., a Sun Electric subsidiary, dropped its patent infringement suit last year against Curchod and the two companies, Curchod, Autotron and Dynabal sued Sun Electric for patent abuse, interference and malicious prosecution.

The federal court jury in San Jose reached its verdict in the civil suit late Monday after a six-week trial and four days of deliberations.

In a brief statement released late Tuesday, Sun Electric, manufacturer of automotive-test equipment, acknowledged the damages and called the verdict unjustified.